Introduction: A Small LLP in India is a Limited Liability Partnership that meets specific limits on partner contribution and annual turnover, qualifying for reduced compliance under the LLP Act, 2008. This page explains the meaning, legal definition, thresholds, and annual reassessment of Small LLP status.
Meaning of “Small LLP”
A Small LLP is a Limited Liability Partnership that receives lenient treatment due to its limited scale. Classification is based solely on size; there is no separate registration, special form, or restriction on business type. LLPs automatically gain or lose Small LLP status each financial year as their contribution and turnover cross the prescribed limits, affecting filing fees and penalties.
Annual Check
Small LLP status is reassessed annually based on the Statement of Accounts and Solvency. If either threshold is exceeded, the LLP loses reduced compliance for that year. While Small LLP and Small Company classifications are similar, they are independent. Both aim to ease compliance for smaller entities.
Criteria for a Small LLP
| No | Criterion | Statutory threshold |
|---|---|---|
| 1 | Partner contribution | up to ₹25 lakh |
| 2 | Turnover (preceding FY, per Statement of Accounts and Solvency) | up to ₹40 lakh |
| For an LLP to qualify as a small LLP, both specified conditions must be met. If either threshold is exceeded, the LLP will no longer be classified as small. | ||
Note: A Small Limited Liability Partnership (LLP) is defined by Section 2(1)(ta) of the LLP Act, 2008, as one with a partner contribution not exceeding ₹25 lakh and a preceding-year turnover not exceeding ₹40 lakh. An LLP loses Small LLP status if it exceeds either threshold. The Central Government has the power to raise these limits up to ₹5 crore for contribution and ₹50 crore for turnover, but the current thresholds remain as specified.
Frequently Asked Questions
Under which law is a Small LLP defined?
What are the contribution and turnover limits for a Small LLP?
In This Article
Author Bio
Meet Sanjeev Kumar, a distinguished advocate before the Supreme Court of India, High Courts, and National Tribunals. Founding Partner of Juriskps Law Offices, a premier law firm, he specializes in commercial, corporate, tax, arbitration, and IPR matters. His incisive legal insights enrich Setindiabiz’s blog with expert commentary.
